The Fair Work Agency (“FWA”) is set to launch on 7 April 2026 and is designed to act as a centralised enforcement body with a broad remit to tackle labour market offences. It will be guided by a tripartite advisory board comprising representatives from unions, businesses, and academia, and will publish annual activity reports to ensure transparency and accountability. In some respects, it’s an administrative reorganisation.

The FWA will bring together:

• The Gangmasters and Labour Abuse Authority (GLAA);
• The Director of Labour Market Enforcement;
• The Employment Agency Standards Inspectorate (EAS); and
• The National Minimum Wage team.

Its mandate includes:

• Strengthening enforcement of workers’ rights;
• Supporting businesses with compliance; and
• Taking robust action against exploitative employers.

Under the current system, individuals must navigate multiple agencies to resolve employment issues. The FWA will offer a single point of contact, making it easier for workers to seek help and for businesses to understand their obligations.

FWA Powers and Phased Implementation

From day one – existing powers

• Prosecution powers.
• GLAA licensing.
• EAS regulatory functions. 

From day one – reformed powers:

• Enhanced investigatory powers.
• Civil penalty regime (modelled on NMW enforcement).
• Labour Market Enforcement Undertakings and Orders.

Future powers –

• Civil proceedings.
• Cost recovery mechanisms.

One of the most significant powers granted to the agency is its ability to fine employers who underpay holiday pay or Statutory Sick Pay (“SSP”). The FWA will be able to:

• Require employers to pay any amount you owe the individual within 28 days; and
• Impose a penalty of 200% of the sum owed, capped at £20,000 per worker. This may be reduced to 100% if paid within 14 days.

There will also be a new record-keeping duty. Employers will need to demonstrate compliance with holiday entitlement and pay rules. The key points in this regard are as follows:

• Records must be kept for six years, even after an employee has left;
• The FWA has the power to inspect records; and
• Failing to keep adequate records will be a criminal offence, punishable by a fine.

Business Concerns and Practical Advice

We understand that businesses may be concerned about the potential cost and litigation risks associated with the Employment Rights Act 2025 (“ERA”), particularly in light of media coverage. As changes are introduced under the ERA, businesses should:

• Stay informed about legal obligations;
• Review and update contracts and policies; and
• Ensure systems are in place to support compliance and organisational resilience.

Legal Update and Next Steps

A number of key changes under the ERA came into force in April 2026, with further industry-shaping developments due to be implemented in October 2026.

We will continue to keep informed of developments as they arise, along with any actions employers will need to take to remain compliant. Please get in touch with us if you need advice on staying compliant and ahead of upcoming changes.